Likud leader Binyamin Netanyahu is "spot on" in some of his criticism of the peace process. Annapolis was indeed stillborn, without a chance of success. The most thorny final status issues remain completely unresolved after a year of negotiating. Hamas is a major impediment to progress. And the Iranian threat is more strategically urgent than the Israeli-Palestinian process.

Given Netanyahu's lead in the polls, these positions are significant.

But Netanyahu's recipe for an improved process, which he calls "economic peace", is hardly the solution we are looking for. Its essential premise--that Palestinians with "full stomachs" will be more moderate politically and ideologically--ignores the failures of 41 years of Israeli and international attempts to manipulate Palestinian politics through a combination of economic carrots and sticks. This is not an economic conflict, but rather a political and even religious one.

As far back as 1967, Minister of Defense Moshe Dayan believed that open borders, employment for Palestinians inside Israel and Israeli aid and investments inside the West Bank and Gaza would neutralize any Palestinian drive for political rights. Under Shimon Peres in the mid-1970s and the Likud thereafter, the open borders approach was expanded to comprise Israeli settlement in the territories. It all blew up in our faces with the outbreak of the first intifada in late 1987.

Since then, both Labor and Likud governments have alternately punished and rewarded Palestinians economically in the vain hope of moderating their hostility toward us. Likud governments in particular, including Netanyahu's a decade ago, have seemingly favored some form or other of "economic peace" that never generated positive results. But Israeli politicians on the left and center as well--notably, again, Peres--have also argued repeatedly and without substance that a regional economic framework is a feasible substitute or at least precursor for a bilateral Israeli-Palestinian political settlement.

The current situation is a perfect example of the futility and illusion of the economic approach to dealing with the Palestinian conflict. We respond to every Qassam rocket fired from Gaza by closing the commercial border crossings, thereby depriving 1.5 million Palestinians of basic commodities. We even have international, Egyptian and to some extent PLO backing for this approach.

Conceivably, one could justify this massive violation of international humanitarian law through collective punishment if it showed positive results. But the use over an extended time of economic sticks vis-a-vis Gaza has neither reduced Gazans' support for their Hamas government nor generated a new Gazan peace movement. This is Israel's default option in view of the seeming futility of either talking to Hamas or reoccupying the Strip and destroying Hamas. But it is not a productive strategy.

In parallel, under the direction of Quartet emissary Tony Blair a major investment effort is being directed toward the West Bank. While it is clearly a good thing to improve Palestinians' quality of life, there is no evidence whatsoever that this has moderated or will moderate those Palestinian negotiating positions that make a peace deal so problematic, e.g., their territorial demands and insistence on the right of return and on exclusive control over the Temple Mount/Haram al-Sharif. Note, too, that both intifadas broke out at times of relative Palestinian economic prosperity, not deprivation, thereby dispelling any illusion among patronizing Israelis and others that "full bellies" keep Palestinians "happy".

Experience also teaches us that even when progress is lacking, freezing discussion of the most thorny final status issues in favor of an economic emphasis or some other approach can only weaken the relatively moderate Palestinian leadership we are currently dealing with and make matters worse.

To sum up, economic benefits for Palestinians are as intrinsically good for them as for any people, but they, like economic punishments, offer remarkably little substantive input to the peace process.

Yossi Alpher is coeditor of the bitterlemons family of internet publications. He is former director of the Jaffee Center for Strategic Studies at Tel Aviv University.

A PALESTINIAN VIEW
Nothing new in Netanyahu's approach

by Ghassan Khatib

In the 41 years of Israeli occupation over the West Bank, East Jerusalem and Gaza, Israel has entertained a range of strategies and approaches for dealing with the Palestinians and the Palestinian territories. This has included strategies that were based on territorial compromise and functional compromise.

From time to time, however, the promotion of an economic approach as the basis for Israeli-Palestinian relations has been mooted. The recent unveiling of Binyamin Netanyahu's "alternative" approach for Israel to use vis-a-vis the Palestinians thus reminds us of several new-old proposals.

There is no doubt that there are many aspects to the Palestinian-Israeli conflict, including an economic factor. However, neglecting the other aspects and concentrating on the economy would lead Palestinian-Israeli relations down the same path of deterioration and violence that Israel's other approaches have always resulted in.

While it is true that there is a quite clear correlation between Palestinian economic deterioration and extremism, radicalization and violence, the years of occupation and the experiences of both sides have shown that there are other more important factors to the conflict.

Netanyahu's recent statements indicate that his response to the failures of the current Israeli strategy under the Kadima leadership and that of Ariel Sharon before Kadima will be to reduce Palestinian economic hardships and improve Palestinian standards of living in a way that will neutralize hostile attitudes and practices toward Israel and the occupation.

In other words, fill Palestinian stomachs and avoid violence.

In fact, Israel tried this approach in the early 1970s. Then, the rate of unemployment among Palestinians became almost equal to the rate of unemployment in Israel and the per capita income in the Palestinian territories was higher than that in most neighboring Arab countries. This was in addition to a relative freedom of movement in both Israel and the Palestinian territories, so much so that that the young generation lost track of where the green line was.

That period also witnessed an unprecedented political and social growth that saw the establishment and flourishing of many mass-based organizations and unparalleled growth in the popularity and activities of local and grassroots political organizations as well as the local branches of the political factions represented in the PLO.

The common denominators of the political and social concerns at that time were the Palestinian aims of achieving self-determination, end of occupation and freedom. At the same time, Palestinians under occupation insisted on identifying with Palestinians around the world, a solidarity expressed through a declared loyalty to the Palestinian political leadership that at the time was outside the territories.

These widely popular positions and demands surfaced in successive waves of popular uprisings and were reflected in the results of local elections in 1976. The insistence of the Palestinian people to end the occupation and achieve independence ultimately culminated in the first intifada of 1987. That finally caused the Israeli leadership to conclude that there had to be a solution based on ending the occupation, at least partially, and that such a solution needed to be reached by political means rather than by force.

Israel later tried a completely different approach with Sharon's unilateral strategy, which was based on determining the future of the Palestinian territories and Palestinian-Israeli relations by force without the need for negotiations or agreements. That approach included the withdrawal from Gaza, the erection of the illegal wall in and around the West Bank and the consolidation of settlements in the West Bank, especially in and around Jerusalem. The failure of this approach, symbolized most radically when Hamas won Palestinian legislative elections in 2006, renewed the debate in Israel over the best approach to the Palestinian-Israeli conflict.

Ehud Olmert's era was a reflection of this confusion. Netanyahu, who appears the strongest candidate to win next year's elections, thus needed to present a different strategy. But instead of learning the lessons of all the previous and failed approaches, he is trying to revive this old-new trick of an economic solution.

Ghassan Khatib is coeditor of the bitterlemons family of internet publications. He is vice-president of Birzeit University and a former Palestinian Authority minister of planning. He holds a PhD in Middle East politics from the University of Durham.

AN ISRAELI VIEW
Doing what is doable

by Uzi Arad

Binyamin Netanyahu's approach to the future of the Israeli-Arab peace process is likely to be driven by a number of considerations. First is the desire to move forward and achieve tangible progress wherever possible, stagnation being simply not acceptable.

Second, progress can be accomplished only within that space that realistically allows for it. To seek progress beyond what is feasible would be an exercise in futility; not to seize opportunities wherever these present themselves would be equally wrong.

Third, from Israel's standpoint, progress can only be defined as that advance which leads to peace with security. Anything else is abnormal. Thus, fourth, the critical task is to realistically judge what is the most extensive scope or space for achievable progress.

This practical approach stands in contrast to the recent ambitious, indeed blatantly impossible effort to accomplish a final status agreement within a year, as some had hoped. By all accounts, the political terrain is simply not ripe for closure on a final status agreement. As the current outcome of this valiant endeavor demonstrates, the negotiators have left unresolved the thorniest issues, the most difficult of which are Jerusalem and refugees.

When it comes to Jerusalem, the very thought of taking a city that is currently united and that should develop and prosper as Israel's capital and a holy place for all three monotheistic religions, and amputating any part of it from the integral whole as a throwback to the long defunct status quo ante, would be a severe failure of imagination as well as contrary to the Israeli and Jewish ethos.

As for the refugees issue, not only should there be zero Palestinian return to Israel but it is also necessary that the principle of fairness be applied when compensation is considered. Just as Arab Palestinians could be compensated so should Jewish refugees from Arab lands--who are also defined by the United Nations as refugees--as required under United Nations Security Council Resolution 242.

Worse still, from Israel's standpoint, the effort to arrive at final status as managed by the current Israeli leadership has mainly yielded Israeli concessions but few, if any, reciprocal Palestinian ones. The absence of reciprocity is yet another critical flaw of final status negotiations.

It would be more practical therefore, at this juncture, to draw the appropriate lessons and put an end to "endism", i.e., to the approach that believes we are within reach of resolving everything in one fell swoop, thereby ending the conflict in a quick fix.

What then should be done instead? One can delineate some "spaces" for doable progress. The first, which seems the least politically loaded and the one that may enjoy the widest international support, is the promotion of economic activity and projects that could quickly improve conditions in the Palestinian areas. Such projects have been advanced by Quartet emissary Tony Blair, Binyamin Netanyahu, Israeli, Palestinian and international officials or entrepreneurs and international institutions. There is a rich agenda of economic initiatives that could, if advanced vigorously by Palestinians and Israelis together, accomplish quick and demonstrably positive results. These would be translatable into job creation, higher revenues and faster economic growth for the Palestinians. While this may not be a substitute for political progress, it will definitely have a positive effect on it.

Political dialogue should certainly continue between Palestinians and Israelis throughout, because while final status issues cannot be resolved at this point, there are a number of other issues, pertaining to civilian or even security areas, which need to be addressed and improved, if only gradually. This would generate a bottom-up process that could prove, over time, more constructive. Institution-building within the Palestinian Authority should be encouraged and the role of the PA's law enforcement and police forces should be further advanced. However, it is only realistic to assume that the burden of security responsibility to fight terror would remain in Israeli hands.

Indeed, terrorism and extremism remain the most serious obstacles on the road to peace and security. A challenge shared by both Israelis and moderate Palestinians is to overcome Hamas. Evidently, as long as Gaza is under Hamas control and as long as Hamas exercises considerable influence in the West Bank and in Palestinian politics in general, these factors seriously undercut any genuine prospect for substantial political progress.

The other space for diplomatic maneuver that could provide for tangible progress seems to lie at the sub-regional and regional level. It has long been advocated by Netanyahu and others that the two countries that made peace with Israel and border on both Israel and the Palestinian territories, namely Jordan and Egypt, be more involved. Some of the economic ideas being considered across the spectrum of Israeli politics, from President Peres to Netanyahu, refer to infrastructure projects that clearly require extensive international cooperation.

Beyond that, there seems also to be space for a new architecture of multilateral regional frameworks. These could sustain the "economic peace" options, some of which entail extensive regional cooperation reaching to the Gulf. In fact, of all the "baskets" of the multilateral negotiations that were conducted in the nineties it now seems that the economics (and water) basket is the most promising. The refugees basket would be the natural venue to discuss the compensation dimension raised above. The regional security basket would be a field for active diplomacy in light of the fact that so many countries within the moderate Arab world, including in the Gulf, confront the threat of a potentially nuclear Iran with all its destabilizing consequences.

Indeed, the single most urgent and important area that necessitates progress is neither the Palestinian nor the Syrian, but that of neutralizing the Iranian threat. This is not only because it is the most serious and potentially dangerous of developments but also because of its projection on the Arab-Israel dispute. The more menacing Iran is, the stronger its surrogates, Hamas and Hizballah, and the more distant the possibility of peacefully resolving Arab-Israel issues.

Prof. Uzi Arad is director of the Institute for Policy and Strategy at IDC, Herzlia. He was foreign policy adviser to PM Binyamin Netanyahu and prior to that served for many years in the Mossad, where his last position was director of intelligence.

A PALESTINIAN VIEW
No substitute for a political solution

an interview with Fadle Naqib

bitterlemons: Binyamin Netanyahu has vowed to improve the Palestinian economy, thereby improving chances for peace. Is this a realistic aim?

Naqib: I don't think it is realistic and I think that has been proven time and again. The premise of Oslo was that if you try to improve Palestinian livelihoods it will help the overall problem. That was proven wrong.

bitterlemons: But Netanyahu said there are certain measures--measures the Palestinian Authority has called for--like lifting checkpoints...

Naqib: But this is ignorant. If you go back to 1987 when the first intifada began, there were no checkpoints and there was no economic problem. In fact, at that time the Palestinian economy was in very good shape.

The problem is political. It is about self-determination and it's about justice. It's not an economic problem. Israel is using the economy in order to break the Palestinian will, to break the resistance and Palestinian determination. That's why the economy is in such a bad state. But its not an economic problem, it's a political problem. It's about sovereignty, the return of refugees and the right of self-determination. If you improve the economic situation this will not solve the problem.

As a matter of fact, this is an idea we've heard many times before. We've heard it from Israel and we've heard it from other governments and international bodies. It contains an element of racism. It says basically that the non-white people, the third world people, the Muslim people and the colored people do not behave according to principles, they behave according to instincts and if you feed them they will do whatever you want them to do. We don't hear about economic problems when there is conflict between two major powers. But when it comes to the third world, this is a common suggestion.

So there is an element of racism and ignorance too. I have not seen any situation where the economy has solved a political problem.

bitterlemons: Netanyahu says that he will continue political negotiations along with improving the economy, yet his long-held position is that he will not make any compromise on Jerusalem and refugees. So where does this leave us?

Naqib: He says that economy does not solve the problem but it makes it easier. So he believes that if you improve the Palestinian economy, Palestinians will be ready to make concessions.

[Palestinian Prime Minister] Salam Fayyad said this is not an economic problem, it's a political problem and it needs a political solution. I agree completely.

Fadle Naqib is the acting director of MAS, the Palestine Economic Policy Research Institute, and will return to his position as professor of economics at the University of Waterloo in Canada at the end of the year.

To be unsubscribed from the mailing list, simply click on the link:
Unsubscribe.

Editors Ghassan Khatib and Yossi Alpher can be reached at ghassan@bitterlemons.org and yossi@bitterlemons.org, respectively.

Bitterlemons.org is an internet newsletter that presents Palestinian and Israeli viewpoints on prominent issues of concern. Each edition addresses a specific issue of controversy. Bitterlemons.org maintains complete organizational and institutional symmetry between its Palestinian and Israeli sides.